FerroxLabs Pricing Strategist
When to Use
Use this skill when:
- The user needs to set or restructure pricing using cost-plus, value-based, competitive, or tiered models
- The user wants help with psychological pricing tactics, A/B testing frameworks, or pricing page design
- The user needs a price increase communication strategy or freemium-to-paid conversion plan
- The user wants to analyze pricing against competitors or design usage-based pricing models
Do NOT use this skill when:
- The user needs subscription-specific pricing with MRR/ARR and churn analysis (use subscription-model-designer instead)
- The user wants broader business strategy beyond pricing (use business-planner or startup-advisor instead)
- The user needs competitive analysis that goes beyond pricing comparison (use competitive-analyst instead)
Process
Gather requirements. Ask the user clarifying questions about their specific context, goals, constraints, and experience level.
Analyze the situation. Review the information provided and identify key factors, challenges, and opportunities relevant to pricing strategist.
Develop the framework. Create a structured approach tailored to the user's needs, incorporating best practices and domain-specific considerations.
Deliver actionable output. Present specific, implementable recommendations with clear rationale, timelines, and success criteria.
Address edge cases. Proactively identify potential issues, alternative approaches, and contingency plans.
Use this skill when:
- User needs guidance on pricing strategist
- User asks about pricing strategist best practices or techniques
- User wants a structured approach to pricing strategist
Do NOT use this skill when:
- A more specialized skill exists for the specific subtopic
- The request is outside the scope of pricing strategist
Questions to Ask the User First
- What is your product/service?
- What is your current pricing? (If any)
- What type of business? (SaaS, e-commerce, services, marketplace, physical product)
- Who is your target customer? (Consumer, SMB, mid-market, enterprise)
- What do competitors charge? (Range of prices in the market)
- What are your costs? (COGS, delivery costs, marginal costs)
- What is the primary value you deliver? (Save time, save money, increase revenue, reduce risk)
- Do you have existing customers to survey?
- What are your growth goals? (Maximize revenue, maximize adoption, market share)
- Are you launching new pricing or changing existing pricing?
Step 1: Pricing Model Selection
Pricing Model Comparison
PRICING MODEL DECISION MATRIX
Score each model 1-5 for fit with your business:
| Model | Revenue | Simplicity | Scalability | Customer | SCORE |
| | Predictabil.| for Buyer | | Alignment | |
|------------------|-------------|------------|-------------|------------|-------|
| Cost-Plus | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Value-Based | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Competitive | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Freemium | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Tiered | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Usage-Based | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Per-Seat | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
| Flat Rate | {{1-5}} | {{1-5}} | {{1-5}} | {{1-5}} | {{}} |
RECOMMENDED MODEL: {{highest_score}}
Model Details
Cost-Plus Pricing
COST-PLUS CALCULATION
Direct costs per unit: ${{direct_cost}}
Indirect costs allocated per unit: ${{indirect_cost}}
Total cost per unit: ${{total_cost}}
Desired margin: {{margin}}%
Price = Total cost / (1 - margin%) = ${{price}}
WHEN TO USE:
- Commoditized products with known costs
- Government contracts requiring cost transparency
- Manufacturing with stable input costs
WHEN TO AVOID:
- Software (marginal cost near zero)
- Products where value far exceeds cost
- Competitive markets where cost-plus overprices you
Value-Based Pricing
VALUE-BASED PRICING CALCULATION
STEP 1: Quantify value delivered
Time saved per month: {{hours}} hours x ${{hourly_rate}} = ${{time_value}}
Revenue increased: ${{revenue_increase}} per {{period}}
Costs reduced: ${{cost_reduction}} per {{period}}
Risk mitigated: ${{risk_value}} per {{period}}
TOTAL VALUE DELIVERED: ${{total_value}} per {{period}}
STEP 2: Determine value capture rate
Industry benchmark capture: 10-25% of value delivered
Selected capture rate: {{pct}}%
STEP 3: Calculate price
Price = ${{total_value}} x {{pct}}% = ${{price}} per {{period}}
STEP 4: Validate
Does this price feel fair to the customer? {{yes/no}}
Can you prove the value with data/case studies? {{yes/no}}
Is there a measurable ROI you can guarantee? {{yes/no}}
Freemium Model
FREEMIUM DESIGN
FREE TIER:
Purpose: Acquisition and habit formation
Features included:
1. {{feature_1}} (core value, limited)
2. {{feature_2}} (enough to be useful)
3. {{feature_3}} (creates desire for more)
Limits: {{usage_limits}}
What is explicitly excluded: {{excluded}}
PAID TIER(S):
Conversion trigger: When user hits {{limit}} or needs {{feature}}
Target free-to-paid conversion rate: {{pct}}% (benchmark: 2-5%)
Expected time to convert: {{days/weeks}} average
FREEMIUM ECONOMICS:
Free users: {{count}}
Cost to serve free user: ${{cost}}/month
Total free user cost: ${{total_free_cost}}/month
Paid users: {{paid_count}} ({{conversion_pct}}% conversion)
Paid ARPU: ${{arpu}}
Paid revenue: ${{paid_revenue}}/month
Net contribution: ${{net}} (must be positive)
Tiered Pricing
TIERED PRICING DESIGN
TIER STRUCTURE:
Tier 1: {{tier_name}} -- ${{price}}/{{period}}
Target customer: {{segment}}
Features: {{feature_list}}
Limits: {{limits}}
Purpose: Low barrier entry, high volume
Tier 2: {{tier_name}} -- ${{price}}/{{period}} [MOST POPULAR]
Target customer: {{segment}}
Features: Everything in Tier 1 plus {{additional_features}}
Limits: {{limits}}
Purpose: Optimal value for most customers (anchor this tier)
Tier 3: {{tier_name}} -- ${{price}}/{{period}}
Target customer: {{segment}}
Features: Everything in Tier 2 plus {{additional_features}}
Limits: {{limits}}
Purpose: Power users, makes Tier 2 look reasonable
Enterprise: Custom pricing
Target customer: {{segment}}
Features: Everything plus {{enterprise_features}}
Purpose: Large accounts, custom needs
TIER DESIGN RULES:
- 3 tiers is optimal (paradox of choice)
- Middle tier should be the target (decoy effect)
- 2-3x price jump between tiers
- Each tier should have a clear "hero feature" that unlocks
- Name tiers by persona, not size (e.g., "Starter, Professional, Team")
Usage-Based Pricing
USAGE-BASED PRICING DESIGN
USAGE METRIC: {{what_you_charge_for}}
Good usage metrics are:
- [ ] Easy for customers to understand
- [ ] Correlate with value received
- [ ] Predictable for the customer
- [ ] Grow as the customer succeeds
PRICING TABLE:
| Volume | Price per Unit | Effective Rate |
|---------------|---------------|----------------|
| 0-{{tier1}} | ${{price1}} | ${{rate1}} |
| {{tier1}}-{{tier2}} | ${{price2}} | ${{rate2}} |
| {{tier2}}-{{tier3}} | ${{price3}} | ${{rate3}} |
| {{tier3}}+ | ${{price4}} | ${{rate4}} |
MINIMUM COMMITMENT: ${{minimum}}/month (if any)
OVERAGE RATE: ${{overage}} per {{unit}}
CONSIDERATIONS:
- Provide a cost calculator on your pricing page
- Send usage alerts at 50%, 80%, 100% of plan limits
- Offer committed-use discounts for predictability
Step 2: Willingness-to-Pay Research
Van Westendorp Price Sensitivity Meter
VAN WESTENDORP SURVEY QUESTIONS
Ask your target customers these 4 questions:
Q1: At what price would {{product}} be so cheap you would
question its quality?
$_______ (Too Cheap)
Q2: At what price would {{product}} be a bargain -- a great
value for the money?
$_______ (Cheap / Good Value)
Q3: At what price would {{product}} start to seem expensive,
but you would still consider buying it?
$_______ (Expensive but Acceptable)
Q4: At what price would {{product}} be too expensive --
you would never consider buying it?
$_______ (Too Expensive)
ANALYSIS:
Plot cumulative distributions of all four answers.
- Optimal Price Point (OPP): Intersection of Too Cheap and Too Expensive
- Indifference Price Point (IDP): Intersection of Cheap and Expensive
- Acceptable Price Range: Between OPP and IDP
Recommended sample size: 100+ responses minimum
Gabor-Granger Method
GABOR-GRANGER SURVEY
Present prices sequentially and measure purchase intent:
"Would you buy {{product}} at ${{price_1}}?"
[ ] Definitely yes [ ] Probably yes [ ] Maybe [ ] Probably no [ ] Definitely no
"Would you buy {{product}} at ${{price_2}}?" (higher)
[ ] Definitely yes [ ] Probably yes [ ] Maybe [ ] Probably no [ ] Definitely no
"Would you buy {{product}} at ${{price_3}}?" (even higher)
[ ] Definitely yes [ ] Probably yes [ ] Maybe [ ] Probably no [ ] Definitely no
Continue until "probably no" or "definitely no" is selected.
Revenue-maximizing price = Price x Purchase probability
Calculate for each price point and select the maximum.
Step 3: Psychological Pricing Tactics
Proven Psychological Pricing Techniques
PSYCHOLOGICAL PRICING CHECKLIST
CHARM PRICING:
$99 instead of $100, $49 instead of $50
Why: Left-digit effect. Brain anchors on first digit.
When to use: Consumer products, mass market
When to avoid: Luxury/premium positioning
ANCHOR PRICING:
Show expensive option first to make others seem reasonable
Enterprise: $999/mo | Professional: $299/mo | Starter: $49/mo
Why: First price seen becomes the reference point
DECOY EFFECT:
Add a tier that makes your target tier look like best value
PRICE ENDING:
$X.99 -- Value/discount perception
$X.00 -- Quality/premium perception
$X.97 -- Sale/clearance perception
Choose based on brand positioning
BUNDLE PRICING:
Individual prices: A=$50, B=$50, C=$50 = $150
Bundle price: All three for $99 (save $51)
Why: Perceived value exceeds actual discount cost
ANNUAL VS MONTHLY:
Monthly: $29/mo
Annual: $24/mo (billed $288/year) -- Save 17%
Display as: "$24/mo" not "$288/year"
Why: Monthly feels smaller, annual improves cash flow
REMOVE THE DOLLAR SIGN:
Menu: Steak 24 (instead of $24.00)
Reduces "pain of paying" -- backed by Cornell research
When to use: High-end dining, luxury services
FREE TRIAL:
14-day free trial (SaaS standard)
No credit card required: Higher signups, lower conversion
Credit card required: Lower signups, higher conversion
Choose based on funnel goals
Step 4: Pricing Page Design
Pricing Page Best Practices
PRICING PAGE STRUCTURE
SECTION 1: HEADLINE
"Simple, transparent pricing" or similar trust-building headline
Optional: One-line value reinforcement
SECTION 2: TOGGLE
Monthly | Annual (show savings percentage)
SECTION 3: TIERS (3 columns recommended)
Left: Entry tier
Center: Recommended tier (highlighted, labeled "Most Popular")
Right: Premium tier
FOR EACH TIER:
- Tier name
- Price (large, prominent)
- Billing period
- One-sentence description of who this is for
- Feature list with checkmarks
- CTA button (primary color on recommended tier)
SECTION 4: FEATURE COMPARISON TABLE
Full breakdown of all features by tier
Use checkmarks and X marks
SECTION 5: FAQ
- Can I switch plans?
- What payment methods do you accept?
- Is there a free trial?
- What happens when I exceed my limits?
- Can I cancel anytime?
- Do you offer refunds?
- Do you offer discounts for nonprofits/education?
SECTION 6: SOCIAL PROOF
Customer logos, testimonials, review scores
SECTION 7: ENTERPRISE CTA
"Need custom pricing?" -- Contact sales
Step 5: A/B Testing Prices
Price Testing Framework
PRICE A/B TEST PLAN
HYPOTHESIS: Changing the price of {{plan}} from ${{current}} to
${{new_price}} will {{increase/decrease}} {{metric}} by {{pct}}%.
TEST DESIGN:
Control: ${{current_price}}
Variant: ${{new_price}}
Traffic split: 50/50
Minimum sample size: {{sample}} per variant (use statistical calculator)
Minimum test duration: {{days}} days (at least 1 full business cycle)
Primary metric: {{conversion_rate / revenue_per_visitor / ARPU}}
Guardrail metrics: {{churn_rate / support_tickets / refund_rate}}
ETHICAL CONSIDERATIONS:
- New customers only (never change price on existing customers mid-test)
- Honor the price shown if customer converts
- Ensure pricing is not discriminatory
- Be transparent if asked
STATISTICAL REQUIREMENTS:
Confidence level: 95%
Minimum detectable effect: {{mde}}%
Statistical test: Two-proportion z-test (for conversion)
RESULT:
Control conversion: {{pct}}%
Variant conversion: {{pct}}%
Revenue per visitor (control): ${{rpv_control}}
Revenue per visitor (variant): ${{rpv_variant}}
Statistically significant: {{yes/no}}
Decision: {{implement_variant / keep_control / run_longer}}
Step 6: Discount Strategy
Discount Framework
DISCOUNT STRATEGY RULES
WHEN DISCOUNTS ARE APPROPRIATE:
- Annual commitment (12+ months upfront)
- Volume commitment (higher tier or quantity)
- Strategic accounts (logo value, case study rights)
- Startup/nonprofit programs (brand goodwill)
- Seasonal promotions (time-limited)
WHEN DISCOUNTS ARE DANGEROUS:
- To close any deal (trains buyers to always ask)
- Large across-the-board discounts (erodes brand value)
- Discounts on new features (devalues innovation)
- Competitor matching (race to bottom)
DISCOUNT TIERS:
Standard: 0% (list price is the price)
Annual commitment: 15-20% off monthly price
2-year commitment: 25-30% off monthly price
Volume (10+ seats): 10-15% negotiable
Strategic/enterprise: Up to 25% with case study rights
Startup program: 50-90% for qualifying early-stage startups
MAXIMUM DISCOUNT AUTHORITY:
Sales rep: Up to {{pct_1}}% without approval
Sales manager: Up to {{pct_2}}% with justification
VP Sales: Up to {{pct_3}}% for strategic deals
CEO: Anything above {{pct_3}}%
DISCOUNT TRACKING:
Track average discount by:
- Sales rep
- Deal size
- Customer segment
- Time period
Target average discount: <{{target_avg}}%
Step 7: Price Increase Communication
Price Increase Playbook
PRICE INCREASE COMMUNICATION PLAN
PREPARATION (4-8 weeks before):
1. Document the justification (new features, costs, market adjustment)
2. Quantify value delivered since last pricing
3. Prepare FAQ for support and sales teams
4. Segment customers by risk of churn
5. Determine grandfather policy (if any)
COMMUNICATION TIMELINE:
T-60 days: Internal alignment (sales, support, leadership)
T-30 days: Notify customers via email (see template below)
T-14 days: Reminder email with FAQ
T-7 days: Personal outreach to highest-value accounts
T-0: New pricing takes effect
T+7 days: Follow up with any customers who have questions
EMAIL TEMPLATE:
Subject: Updates to our {{product}} pricing
Hi {{first_name}},
I am writing to let you know about an upcoming change to our pricing.
Over the past {{time_period}}, we have {{accomplishment_1}},
{{accomplishment_2}}, and {{accomplishment_3}}. These improvements
have helped customers like you {{benefit}}.
Starting {{date}}, your plan will change from ${{old_price}}/{{period}}
to ${{new_price}}/{{period}}.
Here is what this means for you:
- Your new rate takes effect on {{effective_date}}
- You will continue to have access to all features plus {{new_features}}
- If you would like to lock in a lower rate, you can switch to annual
billing before {{deadline}} and save {{pct}}%.
deliver exceptional value, and this investment allows us to {{future_plans}}.
{{support_contact}}.
Thank you for being a valued customer.
{{sender_name}}
{{title}}
RISK MITIGATION:
- Offer annual lock-in at old price as retention tool
- Grandfather long-term customers for 3-6 months
- Provide personal outreach for top 20% of accounts by revenue
- Prepare save offers for customers who threaten to churn:
- Tier 1 save: Extend old pricing 3 months
- Tier 2 save: Offer annual plan at 15% discount
- Tier 3 save: Downgrade to lower tier at same price
Step 8: Enterprise Pricing
ENTERPRISE PRICING GUIDELINES
WHEN TO OFFER ENTERPRISE PRICING:
- Customer needs >{{seat_threshold}} seats
- Customer requires custom SLA, security, or compliance
- Deal size >${{deal_threshold}}/year
- Customer is a recognizable brand (logo value)
ENTERPRISE PRICING STRUCTURE:
Base platform fee: ${{base}}/year
Per-seat fee: ${{per_seat}}/year
Volume tiers:
1-50 seats: ${{tier1}}/seat
51-200 seats: ${{tier2}}/seat
201-500 seats: ${{tier3}}/seat
500+: Custom
ENTERPRISE ADD-ONS:
- SSO/SAML: ${{sso_price}}/year
- Dedicated support: ${{support_price}}/year
- Custom integrations: ${{integration_price}}/year
- SLA guarantee: ${{sla_price}}/year
- Data residency: ${{residency_price}}/year
NEGOTIATION FRAMEWORK:
1. Start with list price -- never discount first
2. Understand their budget and timeline
3. Trade value for discount (case study, multi-year, references)
4. Use total contract value, not monthly rate, for negotiation
5. Never discount more than your maximum authority without approval
Pricing Strategy Checklist
- Pricing model aligns with how customers perceive value
- Willingness-to-pay research has been conducted
- Pricing supports target unit economics (LTV:CAC >3:1)
- Tier structure uses proper psychological framing
- Pricing page is clear and conversion-optimized
- Discount policy is documented and enforced
- Price increase plan is prepared with communication templates
- Enterprise pricing is structured for larger accounts
- Competitive pricing is understood but not blindly followed
- Pricing is reviewed quarterly and adjusted as needed
Output Format
Deliver the response as a structured document with clear headings and actionable content. Use tables for comparisons, numbered lists for sequential steps, and bullet points for options. Include specific examples where applicable.
[Pricing Strategist deliverable]
1. Context and objectives
2. Analysis or framework
3. Specific recommendations with rationale
4. Action items with timeline
Example
Input: "Help me with pricing strategist for a mid-size project."
Output: A complete pricing strategist framework tailored to the specific context, with actionable steps, relevant considerations, and measurable outcomes.
Edge Cases
- Incomplete information: Ask clarifying questions before proceeding rather than making assumptions
- Conflicting requirements: Identify trade-offs explicitly and present options with pros and cons
- Scale mismatch: Adapt recommendations to match the user's context (individual vs. team vs. organization)
- Domain crossover: When the request overlaps with other skill domains, address what falls within scope and reference specialized skills for the rest